KYC (Know Your Customer) is the process by which businesses verify the identity of their clients and assess potential risks. KYC is required by financial regulators worldwide and is increasingly relevant for any business handling significant payments or onboarding new customers.
Typical KYC steps: collect identifying information (name, address, date of birth, government ID number), verify against a government-issued ID document, screen against sanctions lists and politically exposed persons (PEP) databases, assess risk profile, and maintain records.
KYC is often paired with AML (Anti-Money Laundering) compliance and CFT (Counter-Financing of Terrorism) checks under regulations like the US Bank Secrecy Act, the EU's Anti-Money Laundering Directives, and FATF recommendations.